"There is not a moment in which God does not present Himself under the cover of some pain to be endured, of some consolation to be enjoyed, or of some duty to be performed. All that takes place within us, or through us, contains and conceals His divine action. All gentle souls must admire and respect one another, saying: 'Let us each proceed along our path to the same goal, united in purpose, and by the means of God's plan which, in its great variety, is in us all."
Jean-Pierre de Caussade

27 February 2014

The Scandal in America That Is Hidden In Plain Sight - Privilege Blindness

“There’s a new isolationism,” Kerry said during a nearly one-hour discussion with a small group of reporters. "We are beginning to behave like a poor nation,” he added, saying some Americans do not perceive the connection between US engagement abroad and the US economy, their own jobs and wider US interests.

Things may seem rosy from your perspective, John, but the sad truth is that far too many people in this country are doing without, doing more with less, too often living on the edge, and are far too often afraid. They are referred to disparagingly as 'the common 99%', as takers not makers, and even the 'parasitic 47%,'. They are what is commonly referred to as 'the people' in the Constitution.

They are being spied on, bullied, repressed, and conned at almost every turn by a foul partnership of big money and power. They often sacrifice their personal liberties, and send their children to foreign shores to fight in a perpetual war against a loosely defined 'enemy.'

One of the great marvels of the time is how effectively well-funded propaganda campaigns and a captive mainstream media have distorted the peoples' view of reality so that they act as if they are sleep-walking.

An ongoing trend in the US has been a tax code that favors large multinational corporations with loopholes and subsidies that far too often result in an effective tax rate of close to zero, despite booming corporate profits in the face of a long stagnation in median family income and wages.

The real unemployment numbers are shockingly high, and those jobs that are available are often part time and poorly paid. Justice is openly administered in ways that give the powerful a free pass on grossly criminal activity, from laundering drug money to financial racketeering. The rigging of prices and markets by powerful interests, and the lack of effective prosecution of such grave abuses of power, is something that seems to be de facto government policy.

This places small private businesses and individuals at a distinct disadvantage with regard to economic viability in the marketplace. It fosters consolidation and monopoly. It lends itself to a cynicism that is undermining the conscience of many of those who have sworn oaths of office. It isolates dissent to corrals and 'free speech zones.' It breaks up peaceful gatherings of protest with pepper spray, bullets, and clubs. It pollutes the internet with campaigns of disinformation, and silences the voices of journalists.

It is intertwined with the financialisation of the real economy that is a tool for the redistribution of wealth from the many to the well connected few. It feeds the corrupting influence of big money on the political landscape.

And often these multinationals are beneficiaries of government spending of tax revenues on procurements, outsourcing, and other initiatives, particularly with regard to infrastructure and defense spending on perpetual and largely discretionary wars.

And lately corporations have been making headway in the courts to receive all the benefits and privileges of personhood, without having to pay the price of citizenship. War, far from being an occasion of personal loss and privation and risk, is often a beneficial period of significant revenues and greater profits.

The way in which dividends, certain types of executive compensation, and private equity investments are treated for tax purposes merely exacerbates the problem and the ongoing hypocrisy in the trickle down approach to The Recovery™.

The partnership between large corporate America, often called the moneyed interests, and the political class is something that is of deep concern to some, but not known nearly enough. It has been a point of political contention over and over again in US history, and the history of all nations.

If tax reform is on the agenda, closing loopholes, subsidies and government welfare programs for corporate America ought to be a top priority. But change must come.

We are acting like a poor nation John, even a third world nation, with widespread corruption, declining press freedom, a crumbling infrastructure, and an alarming concentration of power in a few hands, a few powerful families. Both political parties are owned by the same elite class and are essentially the same corporate sponsored products; they are just different brands with different target markets.

And you and yours have made it that way. Welcome to our brave new world.

"Inevitably, the tax man will cometh…..Except of course, if you are a large multinational corporation. Despite the political banter over who pays and who does not, the 2000s have ushered in an era of corporations avoiding paying taxes. Armed with teams of CPAs and attorneys, these large multinational companies have pushed the limits on how they can avoid paying taxes and have done so quite successfully.

General Electric, one of the largest and most well respected companies in America has been criticized for paying little or nothing on their corporate taxes the last few years. In fact, GE is currently suing the IRS for over 650 million dollars they feel should have been a tax credit instead of a liability that they owe taxes on.

If you look at the S&P 500 members citing effective tax rates of 0%, it is staggering. With names like Broadcom, Verizon Wireless, Public Storage, Seagate Technologies and even News Corp having not paid any taxes in the past twelve months. The list of companies with a 0% effective tax rate is a long one and perhaps one that needs some attention. It just seems odd that we can tax everything in this country but not huge multinational companies that make billions of dollars each year.

Favorable tax codes and massive amounts of lobbying have created corporate welfare in this country and perhaps the time has come to address the inequalities that exist in the tax code.

It is estimated that that there is over 2 trillion dollars in cash sitting in the coffers of corporate America right now. Shareholder activists like Carl Icahn, are forcing companies like Apple to address what they are going to do with the loads of cash they are sitting on.

What’s really interesting to see is that the divergence between corporate profits and tax receipts on that corporate income. In early 2000, we saw a gap that widened and then virtually exploded.

Currently, corporate profits have never been better yet the liability of paying taxes on those profits has stayed flat. It has created the largest divergence the 2 series have had in over 65 years!"

I have written about this on occasion over the years. You may find prior posts on this subject by clicking on the subject 'Corporate Tax' at the bottom of this posting. Or any of the other subjects as well.

Le Propriétaire

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Need Little - Want Less - Love More

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack even on the least of men is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind." Dietrich Bonhoeffer

"A credibility trap is when the managerial functions of a society have been sufficiently compromised by corruption so that the leadership cannot reform, or even honestly address, the problems of that system without implicating a broad swath of the powerful, including themselves.

The moneyed interests and their aspirants tolerate the corruption because they have profited from it, and would like to continue to do so. Discipline is maintained by various forms of soft financial rewards and career and social coercion."

These are personal observations about the economy and the markets. In providing information, I hope this allows you to make your own decisions in an informed manner, even if it is from learning by my mistakes, which are many. As a standing policy I never provide individual investment advice to anyone. I will only occasionally disclose my personal positions for purposes of illustration. Understand that my own circumstances could differ greatly from your own, and therefore what is suitable for me may not be suitable for you. My comments are intended to be reflection on general macro financial and economic events and trends.